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Information markets in Third World Economies

One of the great things that attracts investor capital is the ability of third world countries to show double digit growth. This story of almost all developing nations mean a scope for investments for other organizations present world-wide. Various countries have different economic policies, such as the open policy by China to attract huge FDI, and the partially open economy by India which invites FDI but limits the amount which can be withdrawn.

Why is this story selling for the past 5 or so years?

The answer is simple. Third World nations represent an inefficient market. A place where the buyers and sellers do not have access to complete information about the transaction. Since there is hardly any organized sector in such markets, there is virtually no analysis done on the varied types of transactions. This absence of information creates an inefficiency in the market … the simple act of saving each and every market transaction and making it available to the public creates the huge value of wealth maximization for both the buyer and the seller.

Wealth Creation by Information Symmetry

Imagine a scenario where a seller wants to sell a book for five dollars, it’s slightly used but the book is not easily available in the market. But the seller does not know that … the seller implicitly assigns a value of 5 dollars and expects the same amount in return. Now if a buyer who values the book a lot more than that were to find about the book, then he will finish the transaction at five dollars (even if he were ready to pay more). So what just happened back there? A book was exchanged for a lesser amount than what it would have fetched. Had the seller known that it could have fetched more (if he had access to that information), then the seller would have generated more wealth by selling at a higher price.

Take a look at this scene from Pretty Woman, had Julia Roberts known that Richard Gere was willing to pay 4000 USD for the week, then she would not have settled on 3000 USD in the first place! This is the power of Information Symmetry!

Information Markets

So in developing countries such as Brazil, Tanzania and India, the one sure shot formula for wealth creation is by creating an information market and making it available to the general public. We can also refer to information markets as Free online Classifieds, a site where people can post information about their buying and selling requirements.

We wanted to sell our six year old car and used a similar service to get the highest price for a used car. Access to such an information market not only ensured that we got the highest bidder, but also reduced the transaction hassles for us.

Conclusion

Any information market (such as an online classified) brings the buyer and the seller on the same platform and ensures that the seller gets a higher price and the buyer gets a chance to purchase the same price at a lower cost.

An information market is hugely successful wherever the market is fragmented and does not have any organized player.

An information market also increases the reach of local organizations.

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The political Ganesha festival

My home is on the intersection of a very busy main road (N. S. Phadke Marg). The lane which connects our society to the main road is often desolate and most of the year it lies in neglect. However, whenever you have a social festival such as Ganesha, Dahi Handi, Holi, etc, then this lane gets decorated and pandals are setup to give a different and lively look to the road.

Every year for Ganesh Chaturthi, we would have a pandal setup near the intersection and this would lead to a throng of visitors … good for the community, but irritating for the drivers trying to turn into the lane from the busy traffic signal. This year, there were two pandals instead of one. I decided to enquire about this, why would a community divide their resources for two different celebrations?

The Two Parties

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Turns out that the local MLA of this area is a Shiv Sainik and was putting that over all the available hoardings during the festival. To match this the local Congress representative had his cronies setup another pandal with the Congress banners. Boom, you now have two pandals in a narrow lane.

I have not seen any of their decorations, however I am sure that there would be strong competition within both of them to outshine the other.

Interestingly, this has helped the local community instead of cause friction between the two parties. More people are involved in the local festivals, there is a constant presence of Police these days which reduces the traffic jams (although many would disagree on this point!).

So, what?

I see a lot of government resources being put to use. But atleast its not filling the pockets of corrupt people. The co-operation and co-ordination shown during this event is quite good to see … why cant this be done across the nation? At least that way we can stop this Congress, Anti-Congress … Modi, Anti-Modi … BJP, Anti-BJP.

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Deep-Pooja

Deep Pooja: The House Cleaning

Please do not confuse this with Diwali, Deep Pooja is an esoteric ritual celebrated by Maharashtrians. This day also coincides with the gastronomic Gatari as well. As we all know what follows Gatari is a month of diet control (much like Lint for Christians or Ramzan for Muslims), where we try and avoid eating non-vegetarian food.

So why take this diet?

There are multiple reasons why this diet is part of annual ritual for many Maharashtrians.

  • It helps cleanse your system with a month of vegetarian diet
  • That one month coincides with the breeding season of the fish, thus giving nature time to replenish the resources that we consume in a year
  • It also gives you a reason to celebrate and eat, drink and be merry

This will go on till Ganesh Chaturthi, post which the month long fast is broken.

What is Deep Pooja?

Deep Pooja is the cue to the community to do house cleaning of all the lamps in the household. In the days before electricity, the light provided after sunset was using oil lamps. The bigger and richer the household, the more lamps they used. Deep Pooja was the day when all the lamps in the household were cleaned of all the grime and oil residue, and thanked by the household for providing them with light.

Of course, with every festival such as this, there is specific Pathare Prabhu cuisine such as Umbar.

So do we thank Electrical Switches and Tubelights now?

Nope. At this point of time, pragmatism kicks in. Yet, all the lamps in the household are cleaned and made ready for their use (Ganpati, Diwali). We are yet to start thanking Electricity and service providers (yes, when I thank Reliance, that’d be the day!!). However, we still do house cleaning during this time and that is what this day should represent.

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Perfect Posts On Social Platforms

What makes the Perfect Post on Social Platforms?

Perfect Posts On Social Platforms

 

When it comes to maintaining your presence on different Social Media networks, the key to this is timing, consistency and knowing what your audience appreciates. As your channel matures, your audience will start realizing that your updates are according to a schedule, which means your interested audience can know exactly when to check your channel for news they can use.

The time in these platforms and the platforms themselves should also give you a cue as to which social update to put where and when.

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UK Government and its forced IE6 use

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As a developing country, we often take a look at how are some of the infrastructure problems handled by the developed nations. In fact in most of these cases, we end up emulating them … the western culture, the accents, the products … we are more than happy to borrow from our western brothers … since they are more developed.

Or so, that is what they would have us believe.

Imagine a governance system wherein you could simply go to a website, fill out the relevant form and be done with it … instead of going to the local municipal center, finding the relevant department, waiting in line, trying to fill the form and get the proper official’s blessing so that the problem could be addressed. Seems futuristic and too good to be true, eh?

Well, I was lucky to have participated in one such e-governance implementation drive back in 2002. This was for Navi Mumbai Municipal Corporation (NMMC), and we were somehow involved in the implementation of this system. So yes, these things are in India as well. But according to this article in the Inquirer, the UK has already been using this system.

So what’s the catch?

The system which the UK government has so meticulously built supports on IE6 and Windows XP!

Alright, lets take a minute for that to sink in.

  • Microsoft does not support Windows XP anymore
  • Ergo, Microsoft does not support IE6 anymore as well
  • IE6 used to come bundled with Windows XP
  • These days you get IE8 or IE9 … in fact we should be starting to see IE10 any time soon

That means in the real world … in the developed countries, IE6 is dead. Yes, we have asked for it and celebrated its death as well.

A platform created for the people in the UK which can only currently be used by the people of China (at least according to the map in the above link). I wonder, if they have a mobility middleware in place so that the site renders on mobiles.

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Inequality can still be fair

I know Mahul through CrazyEngineers (CE), and was in touch with him recently with regards to changing the link to my blog (was getting a fair amount of 404s!). During this time, I chanced upon one interesting post he had written on Inequality and Fairness.

In fact, to a certain degree, I agree with Ayn Rand’s theory of objectivism, and agree with the concept of the  free market in principle. I am the firmest believer that people should not be given anything for free, because it acts as a deterrent to motivation to work hard, which, at the end of the day, is what creates value in a society. In principle, everyone should have an equal opportunity to succeed in a free market, and whatever product holds the greatest value should be the one to succeed.

Here’s an excerpt from the post, I (go on, read the rest of his post in the link I provided, then come back and read this counter post!).

In real life, there are no ideals. There are no whites and blacks … there are 50 shades of grey :-)

People do not get equal opportunities, because those opportunities are the fruits of their predecessors. Mr. Anil Ambani is living in such an abode, because of the efforts of his father (who came from very humble beginnings). How he managed to get there is a different story … but lets not write-off those efforts which ensured that his children get better opportunities than the common man.

The beggar on the street is getting no opportunities not only because of his circumstances, but also because of his lineage.

In a real free market however, this is hardly the case. Because the humble 5 rupee lemon soda, though holds more value, is significantly less likely to succeed.

The humble 5 rupee lemon soda does not come with an international FDA approval. Pepsi, Coca-Cola and other pesticides do :-)

Sometimes, it’s the overheads which have to be set off. It might be true that the concentrate costs INR 1 to produce, however if you add the advertising, marketing, inventory and distribution costs on top of it … not to mention the corporate salaries … then INR 10 does not seem that high. What’s more important that people are willing to purchase it at that price point.

As a service/commodity provider, I would always go for value based pricing! Which is what a true real free market would behave like. However, we are in no real free market … there is a regulatory body and the price is capped at the Maximum Retail Price (MRP).

Life is not fair, people are not equal.

Your efforts will pay dividends for your descendants … and other people will say that they are lucky and life is not fair :-).

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